Before: ADAMS and HIGGINBOTHAM, Circuit Judges, and TEITELBAUM, District Judge.*fn*
Opinion OF THE COURT
ADAMS, Circuit Judge.
This case is one of several brought in this Court by Port Norris Express Company, Inc. (Port Norris), challenging what it claims to be excessively broad authorizations granted to competing carriers by the Interstate Commerce Commission (ICC). In three previous cases, No. 81-2589, No. 81-2640, and No. 81-2641, all entitled Port Norris Express Co., Inc. v. Interstate Commerce Commission, the ICC did not defend its grants of authority but instead asked this Court to remand in light of American Trucking Associations, Inc. v. ICC, 659 F.2d 452 (5th Cir. 1981) (ATA I). ATA I, discussed infra pp. 8-10, was a general challenge by trade associations, a union, and several trucking firms to ICC rules and policies implementing the Motor Carrier Act of 1980. These rules and policies, in effect when the various applications challenged by trade associations, a union, and several trucking firms to ICC rules and policies implementing the Motor Carrier Act of 1980. These rules and policies, in effect when the various applications challenged by Port Norris were made, were in large part invalidated by Ata I because they required applicants to request and receive wider authority than could be justified under the statute.1 Although in the present case the ICC has chosen to defend its grant of authority we conclude that this grant -- like those involved in the previous Port Norris cases -- requires reconsideration in light of ATA 1.2
I
On February 7, 1982, Dennis Trucking Company, Inc. (Dennis) filed an application with the ICC pursuant to 49 U.S.C. § 10922(b).3 The application sought to expand the authorization that the company previously held, so that it would be able to transport "general commodities" (except for Class A and B explosives) in a region fully encompassing twelve states and the District of Columbia. Authority to transport "general commodities" includes among other things the right to transport both "bulk" and "household goods" unless these two highly specialized types of service are specifically excepted or placed in the vehicle without regard to order and without packaging. See Steere Tank Lines, Inc. v. ICC, 666 F.2d 255, 257 n.3 (5th Cir. 1982). Dennis had not previously carried either household goods or bulk commodities, and its territorial range had been much narrower than that sought in the application. Dennis' application was supported by statements of thirty-five shippers. While some of these shippers do ship commodities susceptible of being transported in bulk (see Addendum to Respondents' Brief at 27-29), none specifically stated that it needed Dennis to transport any commodities in bulk.
Port Norris, a carrier specializing in bulk transportation, filed a timely protest to Dennis' application, urging that there was insufficient evidence of public need to justify including bulk commodities in Dennis' authorization. A protest by a group of household goods carriers challenged the sufficiency of the evidence to support a finding either that Dennis was fit, willing, and able to transport household goods, or that Dennis had shown public need for its services as a household goods carrier.
On June 26, 1981, ICC Review Board No. 2 granted the entire authority for which Dennis had applied. Port Norris and the group of household goods carriers filed an administrative appeal. ICC Appellate Division No. 1, consisting of three Commissioners (one of whom did not participate in this case), affirmed the Review Board on September 10, 1981, without issuing an opinion. The ICC issued a certificate to Dennis on October 21, 1981.
Port Norris petitioned this Court on November 16, 1981 to review and set aside the decision of the ICC with respect to Dennis' bulk authority. Although there is some ambiguity in Port Norris' briefs, counsel made clear at oral argument that Port Norris does not challenge Dennis' authorization to transport household goods. Since the household goods carriers did not seek review of the Appellate Division's decision, we do not consider the propriety of the grant of household goods authority to Dennis. Dennis has filed a brief as an intervenor in support of the ICC. Respondent United States of America has declined to oppose or support the ICC's decision in the present case.
II
It is undisputed that the Motor Carrier Act of 1980, Pub. L. No. 96-296, 94 Stat. 793 (1980), which is the source of 49 U.S.C.§ 10922(b), was designed to ease carrier entry into the trucking industry. See Gamble v. ICC, 636 F.2d 1101, 1103 (5th Cir. 1981): "The principal goals of the legislation . . . are to promote greater competition by allowing easier carrier entry, to simplify and expedite the certification process, and to lessen restrictions on motor carrier operations." Indeed, the Act itself states that it is "part of the continuing effort by Congress to reduce unnecessary regulation by the Federal Government," and that "historically the existing regulatory structure has tended in certain circumstances to inhibit market entry, carrier growth, maximum utilization of equipment and energy resources, and opportunities for minorities and others to enter the trucking industry." Motor Carrier Act of 1980, §§ 2 & 3, 94 Stat. at 793 (1980).
The Act, however, plainly did not deregulate motor carrier entry completely. If the ICC is to grant authority to a party such as Dennis, then under section 10922(b) (1) (A) it must find that Dennis is "fit, willing, and able" to perform the authorized service; further, under section 10922(b) (1) (B), it must find that there is a "public demand or need" for the service. The legislative history of these provisions helps to clarify the balance Congress was attempting to strike between easing entry on the one hand and retaining regulation on the other:
Paragraph (1) of the new section 10922(b) sets forth the entry standards to be used by the Commission in determining whether to issue a certicate authorizing operation as a motion common carrier of property. It retains the traditional test that all applicants must be fit, willing, and able. However, it revises the public convenience and necessity requirement. Sepcifically, it reduces the burden of proof on persons supporting the application. Persons supporting the application will be required to come forward with some evidence of a public need or demand for the service. Under this standard, proponents of the application must show that the service they propose would serve a useful public purpose, responsive to a public demand or need. For example, this demonstration could be made by public officials, shippers, receivers, trade associations, civic associations, consumers, and employee groups, as well as by the applicant itself. The normal way to establish this has been for applicants to submit evidence of some of those who would use the service proposed. The Committee thinks that this is still the most effective evidence, for it provides the Commission with the information it needs to frame a grant of authority and provides a factual framework for dealing with the application and the interests of the parties on both sides. However, the Committee does not intend to restrict the Commission in which factors it can consider in determining whether the proposed service is responsive to a public demand or need. These factors include the following: a need or demand for new services, innovative quality or price options, increased competition, greater fuel efficiency, improved service for small communities, improved opportunities for minorities, and any other benefits that would serve a useful public purpose. This is consistent with the Commission's consideration of the National Transportation Policy, including any of the applicable factors listed in section 10101(a) (7) (A) through (H). Where an application is uncontested, the Commission will be concerned with the fitness of an applicant and whether the applicant has met his prima facie showing of public need.
H.R. Rep. No. 96-1069, 96th Cong., 2d Sess. 14-15 reprinted in 1980 U.S. Code Cong. & Ad. News 2283, 2296-97.
Port Norris argues that despite the statement in the House Report that "[p]ersons supporting the application will be required to come forward with some evidence of a public need or demand for the service," the Act requires that " substantial evidence " be proferred.Reply Brief at 16-18. Since we find that there is not even "some evidence," we see no need here to resolve the issue.4 With respect to the "fit, willing, and able" criterion, the ICC seems not to dispute that there must be "substantial evidence" of Dennis' qualifications to provide transportation in bulk. And it appears to concede that the standard of review this Court must utilize is that the agency's decision must be set aside if "unsupported by substantial evidence," 5 U.S.C. § 706(2) (E). Respondent's Brief at 13.
Substantial evidence has been defined as:
Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 95 L. Ed. 456, 71 S. Ct. 456 (1951). See also, e.g., Consolo v. Federal Maritime Commission, 383 U.S. 607, 620, 16 L. Ed. 2d 131, 86 S. Ct. 1018 (1966).
Under ICC "guidelines" in effect when Dennis made its application (the so-called "New Certificate Statement," Ex Parte No. 55 (Sub-No. 43A), 45 Fed. Reg. 86,798 (1980), Dennis had little choice but to apply for bulk authority whether or not it was "fit, willing, and able" to transport in bulk and whether or not there was a "public demand or need" for its services as a bulk carrier. And under these same guidelines the ICC is likely to have granted such authority regardless of whether the two statutory requirements had been met. ATA I, supra, found that these "guidelines" insofar as they pertain here, contravened the statute. According to ATA I, the so-called guidelines were in fact mandatory rules enforced by threats of delay and of expensive litigation.5 The Court concluded:
In short, in its announcement in the New Certificates Statement, the Commission has prescribed the use of its list of certain commodity descriptions, "discouraged" the use of any deviations from the list, and required justification for proposing a deviation from the prescribed list.99 The Commission states that carriers may seek to justify departure from its standards. This imposes the same in terrorem constraint that the Commission found to have been the past practice but now condemns: the fear of lengthy and expensive litigation.
The New Certificate Statement has been applied in mechanistic fashion to other applicants. Thus, in Red Arrow Freight Lines, Inc. v. ICC, appeal docketed, No. 81-4109, (5th Cir. Apr. 2, 1981), the applicant testified, in response to an opposing carrier's argument that it "is not in a position to handle and does not intend to handle [bulk commodities] now or in the foreseeable future," that it had no tank vehicles or no intention to purchase any, and that the only reason it applied for general commodities unrestricted to bulk was because it believed it had to use that description under the Commission's "policy statement" Nevertheless, the Commission refused to restrict the grant of authority against transportation of bulk commodities.
In Steere Tank Lines, Inc. v. ICC, appeal docketed, No. 81-4170, (5th Cir. May 11, 1981), the petitioner opposed the application because it included bulk commodities pursuant to the "policy statement," pointing out applicant had never provided bulk service, had no shippers seeking that service now, and had no equipment or intention to render such service. The applicant conceded all these matters and took no position on whether a restriction sould be placed on the certificate. The Commission stated that it "no longer favors imposing bulk restrictions" as they are "too restrictive."
659 F.2d at 471-472, footnotes other than 99 omitted. Addressing himself specifically to the issue of bulk service, Judge Alvin Rubin wrote for the court:
The New Certificates Statement states that the Commission's policy is to "disallow all restrictions except those implicitly or explicitly acceptable in the Act," including elimination of bulk service restrictions from grants of general commodities authority. The Commission regonized that "[w]hile it is true that every carrier does not operate every type of equipment all of the time," it still maintained that "nothing is gained by limiting authorities merely because the applicant does not already have the special equipment." Apparently, the Commission was motivated by a desire to achieve "overall transportation economies and efficiencies . . . by encouraging competition."
Here, . . . the Commission has exceeded its statutory mandate by granting authority to carriers who cannot demonstrate that they are "fit, willing, and able to provide the transportation to be authorized by the certificate." Bulk service requires special equipment, such as tank trucks, that many carriers do not have. Moreover, as pointed out by opponents to the Commission's statement, most carriers are not fit to provide bulk service because they will not have the proper cleaning facilities for tank trucks, and in the case of hazardous bulk materials (other than class A and B explosives), will not know the appropriate safety regultions for handling bulk items, or have satisifed the special insurance limits pertaining to hazardous materials.
1. In American Trucking Associations, Inc. v. ICC, 669 F.2d 957 (5th Cir. 1982) (ATA II), the Fifth Circuit issued a writ of mandamus enforcing ATA I, along with an opinion clarifying its initial decision. In American Trucking Associations, Inc. v. ICC, 673 F.2d 82 (5th Cir. 1982) (ATA III), the court declined to undertake an across the board review of all ICC decisions in violation of ATA I. According to ATA II, supra, 669 F.2d at 959, n.1, the ICC allowed the time for filing a petition for certiorari with the Supreme Court in ATA I to lapse. After ATA II, however, the ICC petitioned for certiorari, asking the Supreme Court to review both ATA I and ATA II. Justice White issued a stay of the mandamus pending the filing and the disposition of the ICCps petition for certiorari, S. Ct. No. A-810 (March 29, 1982). In the present case, the ICC and Port Norris have not discussed ATA II or ATA III. Port Norris relies heavily on ATA I, and the ICC distinguishes but does not challenge ATA I. A recent decision of the District of Columbia Circuit, Ritter Transportation, Inc. v. ICC, 684 F.2d 86, 221 U.S. App. D.C. 312 (D.C. Cir. July 27, 1982), relying on ATA I and on Steere Tank Lines, Inc. v. ICC, 666 F.2d 255 (5th Cir. 1982), vacated an order of the ICC that had removed restrictions on Port Norris, Port Norris' authority is not an issue in the present case, however.
2. A fifth Port Norris case, No. 81-3019, Allied Bulk Carriers, Inc., Intervenor, has yet to be decided by this Court.
3. That provision reads: (1) Except as provided in this section, the Interstate Commerce Commission shall issue a certificate to a person authorizing that person to provide transportation subject to the jurisdiction of the Commission under subchapter II of chapter 105 of this title as a motor common carrier of property if the Commission finds -- (A) that the person is fit, willing, and able to provide the transportation to be authorized by the certificate and to comply with this subtitle and regulations of the Commission; and (B) on the basis of evidence presented by persons supporting the issuance of the certificate, that the service proposed will serve a useful purpose, responsive to a public demand or need; unless the Commission finds, on the basis of evidence presented by persons objecting to the issuance of a certificate, that the transportation to be authorized by the certificate is inconsistent with public convenience and necessity. (2) In making a finding under paragraph (1) of this subsection, the Commission shall consider and, to the extent applicable, make findings on at least the following: (A) the transportation policy of section 10101(a) of this title; and (B) the effect of issuance of the certificate on existing carriers, except that the Commission shall not find diversion of revenue or traffic from an existing carrier to be in and of itself inconsistent with the public convenience and necessity. (3) The Commission may not make a finding relating to public convenience and necessity under paragraph (1) of this subsection which is based upon general findings developed in rulemaking proceedings. Section 10101(a), referred to in § 10922(b) (2) (A), reads: § 10101. Transportation policy (a) Except where policy has an impact on rail carriers, in which case the principles of section 10101a of this title [49 USCS § 10101a] shall govern, to ensure the development, coordination, and preservation of a transportation system that meets the transportation needs of the United States, including the United States Postal Service and national defense, it is the policy of the United States Government to provide for the impartial regulation of the modes of transportation subject to this subtitle, and in regulating those modes -- (1) to recognize and preserve the inherent advantage of each mode of transportation; (2) to promote safe, adequate, economical, and efficient transportation; (3) to encourage sound economic conditions in transportation, including sound economic conditions among carriers; (4) to encourage the establishment and maintenance of reasonable rates for transportation without unreasonable discrimination or unfair or destructive competitive practices; (5) to cooperate with each State and the officials of each State on transportation matters; (6) to encourage fair wages and working conditions in the transportation industry; and (7) with respect to transportation of property by motor carrier, to promote competitive and efficient transportation services in order to (A) meet the needs of shippers, receivers, and consumers; (B) allow a variety of quality and price options to meet changing market demands and the diverse requirements of the shipping public; (C) allow the most productive use of equipment and energy resources; (D) enable efficient and well-managed carriers to earn adequate profits, attract capital, and maintain fair wages and working conditions; (E) provide and maintain service to small communities and small shippers; (F) improve and maintain a sound safe, and competitive privately-owned motor carrier system; (G) promote greater participation by minorities in the motor carrier system; and (H) promote intermodal transportation.
4. The ICC's position on this question is puzzling. Though its brief here argues that "some evidence" of public demand or need is all that is required, it has clearly announced in Averitt Express, Inc., Extension -- Points in the United States, No. MC-121600. Sub. No. 13F (unprinted; Division 1), serv. February 6, 1981, that is does not employ the "some evidence" standard in this context. See also, e.g., Rockingham Carriage Service, Inc., Extension -- Trucks, Truck Chassis, Trailers and Busses, No. MC-153553, Sub. No. 1 (unprinted; Divison 1), serv. January 8, 1982, which appears to indicate that the ICC requires "substantial evidence" of public demand or need.
5. See also Steere Tank Lines, Inc. v. ICC, supra 666 F.2d at 257, which relies on ATA I for its view that the ICC's "restriction removal" guidelines "ineluctably compel an applicant to use the categories suggested by the Commission" and have a "coercive effect." ATA I made findings both with respect to "restriction removal" and "new certificates," but only a "new certificate" is involved in the present case.
99. In numerous instances the Commission has granted applicants authority they did not seek. In [many] cases the applicants applies for authority to transport general commodities [ except household goods and classes A and B explosives] but were granted by the Commission authority to haul all general commodities except classes A and B explosives. . . .
6. The ICC refers to itself in the plural, apparently overlooking that the United States of America declined to take any position in this case.
7. The issue of competitive harm has been dropped by Port Norris. Port Norris apparently no longer believes that it could meet its burden under Section 10922(b) (1) of demonstrating that a grant, supported by sufficient evidence of public demand or need, would nevertheless cause such harm as to be "inconsistent with public convenience and necessity." But, of course, it claims that Dennis has not met its initial burden of showing public demand or need. 2a It may be enough that the applicant is willing and has the financial resources to obtain the equipment since it would not be prudent business practice for a carrier to open new terminals and buy additional equipment before it knows whether the authority it seeks will be granted.
8. Even Crest Brick Co. did not say that it needed bulk service from Dennis. Crest Brick Co. ships many commodities besides bauxite and aluminum, and it ships bauxite and aluminum in bags, boxes, and drums as well as "loose," i.e., in bulk. Thus it is quite difficult to support an inference of need for bulk service, even from Crest Brick Co.'s statement.
9. The ICC also intimates that an additional shipper, Bethlehem Steel, stated that it would require bulk service in the future. Respondent's Brief at 19 n.19. This is somewhat misleading.So far as the record indicates, Bethlehem Steel appears to ship no commodities susceptible of being transported in bulk (see Addendum to Respondent's Brief at 27-29), and its concern with future needs seems clearly to be a concern with increased future demand for the same commodities it currently ships. See Appendix at 48.
* Honorable Hubert I. Teitelbaum, United States District Court for the Western District of Pennsylvania, sitting by designation.